From Paper to Electronic Order: The Digitalization of the Check in the USA

Also published in Penn State Journal of Law & International Affairs, Vol. 4, No. 1, 2015. Available on SSRN.

Abstract

This article explores the various stages in the check payment in which electronic transmission has replaced physical delivery. Part I discusses converting the check into an electronic entry at a point of sale of goods and services. Part II addresses the electronic presentment of a check. Part III deals with the possible conversion of the check from paper to electronic, and vice versa, within the interbank check collection system. Interbank exchange of check images is the subject of Part IV. Part V addresses the electronic order that operates like a check but that has never been in a paper format. This article examines the applicable provisions of the Uniform Commercial Code, U.S. federal regulations and legislation, and proposals for reform, as well as private-sector norms. Having explored existing norms and proposals, the article concludes with a plea for advancing the process of the complete electronification of the check and its collection process as well as for the establishment of a comprehensive legal scheme to govern such matters.